TSA Policy: Atiku Throws Challenge At NPA

The Nigerian Ports Authority and and Integrated Logistics Services Nigeria Limited (Intels), Nigeria’s leading logistic firm for the oil and gas industry, are locked in a fierce business dispute, with the NPA threatening to terminate Intels’ port revenue collection contract.

Those familiar with the matter said the dispute, which has seen the two parties hold several tension-soaked meetings and exchange aggressive correspondences, arose from Intels’ alleged non-compliance with the Federal Government’s Treasury Single Account policy.

The two parties also appear to disagree over the funding of a key capital project the logistics company is handling for the NPA.

Intels was co-founded by former Vice-president and chieftain of the All Progressives Congress, Atiku Abubakar; and an Italian businessman, Gabriel Volpi, in the 1980s.

The Revenue Sharing, TSA face-off

On March 15, the Managing Director of the NPA, Hadiza Bala-Usman, wrote to Intels asking it to comply with government’s TSA policy, which demands that service boat revenues collected through commercial banks must immediately be swept into the relevant account in the Central Bank of Nigeria.

Ms. Bala-Usman had proposed a new arrangement for sharing the revenue stream. The company will receive 28 percent as agency commission from boats service revenues, while the remainder will be shared on a 30:70 percent ratio in favour of government and the company respectively.

The TSA was introduced by government to enthrone centralized and transparent management of all government revenues and plug leakages. Some analysts have criticised the policy saying the nation’s financial sector is under severe stress as the TSA policy starves commercial banks of cash.

But in its March 27 response, Intels, though, accepted the new sharing arrangement, it, however, said it was unable to comply with the TSA policy because it had loan commitments with some commercial banks.

“We still have an issue with the making of payments to a financial institution with complete sweep of funds to the TSA account,” the company said.

The company said it used its books as collateral for the loans and that compliance is only possible if creditor banks continued to collect and hold revenue on its behalf.

“As you will understand, this (total compliance with TSA) will be unacceptable to the banks,” said the company, in its letter signed by Chief Executive of the company, Andrew Dawes, to Ms. Bala-Usman. “The result of this will be a run of our financing. We are sure this is not a result NPA desires.”

According to the company, both parties have subsisting agreement which also involves third parties. The third parties, including banks, came into business based on “approved understanding” that part of the collections would be used to service Intels’ commitments to them, the company said.

The NPA’s TSA requirement, according to the company, meant “all funds”, including what is due to it and third parties, will go to the TSA first and, afterwards, the parties will be paid their entitlements from the CBN.

“But we can marry the two; keep the agreement and still comply with the TSA policy which should be for only money due to the NPA, indirectly the government,” said the company.

However, in another letter to the company on April 19, the NPA told Intels the government’s policy on TSA is “sacrosanct and must be complied with”.

The ports regulator said it had even displayed magnanimity by allowing the collection of boats service revenue using two commercial banks even in the face of the TSA policy. It said the arrangement was to allow a window for both parties to track transactions before they are subsequently swept into TSA accounts in the CBN.

“Therefore, your expression of fears is unnecessary as no party will be short-changed in any form,” NPA said.

Those familiar with the matter said the logistics company is yet to respond to NPA’s April 19 letter

Giving further insight, officials who asked not to be named said NPA’s insistence on TSA compliance is to ensure transparency so that the Authority knows what actually comes in as revenue before sharing among parties based on the new terms proposed.

The authority fears the company could under-declare revenue collection before effecting payment to NPA, hence, the demand that all revenues first go into TSA for both parties to see before sharing.

The stand-off over project financing

The two parties are also bickering over the financing of “Phase 4B” project, which entails the expansion of Floating, Production, Storage and Offloading units and container terminals at Onne.

Intels says NPA is owing it $109million for the project. The company also wants the regulator to pay parts of the interests that accumulated from the loan it took from banks to finance the project.

“Please accept our thanks for acknowledgement of the reconciled but not yet amortized outstanding amount due of $764,767,414 which sum is for executed project costs on the development of Phase 4B, while we look forward to further discussions on the reconciliation of the outstanding $109 million (which we gathered Intels utilized outside the original work scope of the pase 4B project).

“As has been stated, we need a roadmap towards the repayment of the outstanding loan. As demonstrated, it will take approximately over 27 years to pay back the outstanding amounts. Both parties will need to agree on a realistic mechanism to back outstanding amounts within a reasonable period of time. We have to explore other mechanisms for repayment and are available to discuss options,” Intels further told NPA as conditions for accepting a new revenue sharing arrangement proposed by government.

Accept our terms or lose contract – NPA

However, NPA has told Intels it must comply with the TSA policy, and accept the new revenue sharing arrangement.

Further, NPA said issues raised about interest rate and loans obtained by the company were not government’s concern.

“It is important to reiterate that the Nigerian Ports Authority was not in anyway a party to the loans you had negotiated and secured from commercial banks. The Authority would not like to get involved on how you intend to re-negotiate the interest rates,” NPA said.

On project funding, NPA acknowledged a reconciled $674,767,415 which has not been amortized, but also took notice of a jointly reconciled $128,287323 that is yet to be remitted to government.

Then, the $109 million Intels claimed to have expended “outside initial phase 4B scope of work” would be investigated, re-negotiated and resolved soon, NPA added.

Further, NPA said, going forward, all repayment of reconciled costs of projects, including phase 4B, would be from revenue generated from boats service only. It said other revenue streams would be used for other projects and commitments of the government.

Having rejected Intels’ conditions, NPA asked the company to sign the agreement for the new sharing arrangement to enable “unhindered commencement of the collections of revenue through the dedicated account with the nominated commercial banks.”

“To the extent that you are unable to agree to the terms as proposed, the Authority is left with no other choice but to proceed with the collection of the revenue to our accounts without duly signed supplemental agreement following which termination process of the contract will invariably commence as we have been given directives to ensure immediate compliance to TSA on this revenue source,” NPA said.

But the company said negotiations were ongoing with NPA to resolve the disagreement in ways that both parties will be “happy”.

Intels my most successful business — Atiku

Intels holds the concession for the building and operation of most of Onne Port in Rivers State. The port has two terminals: Federal Ocean Terminal (FOT), and Federal Lighter Terminal (FLT).

The FOT, according to official information accessed by PREMIUM TIMES on NPA’s website, has four phases, of which three have been completed with 11 berths and are being operated by Intels.

Similarly, Intels was responsible, on public-private-partnership basis, for the development of the FLT, commencing 1982 when it was “under-used”; and operates its second, third and fourth berths. Another concessionaire, Brawal, operates the terminal’s first berth.

Onne is the most important hub for oil and gas industry in Nigeria, accounting for 65 per cent of cargo export through the country’s sea, according to NPA, and hosting operations of all major oil and gas companies within its massive free trade zone.

So, over the years, Intels has made billions of dollars from the port, through near monopolistic operations, which it helped develop as concessionaire; and created thousands of jobs.

“Intels is my most successful business,” Atiku said, while launching his 2015 presidential bid in September 2014.

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